February 6, 2018 / 5:05 AM / 9 months ago

Southeast Asia stocks: Slump on global selloff; most erase last month's gains

(Reuters) - Southeast Asian shares suffered heavy losses on Tuesday, extending the rout to a second day, with most of the markets wiping out January’s gains, as a sell-off pummeled markets across the world.

Wall Street plunged in highly volatile trading, with the S&P 500 and Dow Industrials indices slumping more than 4 percent, as the Dow notched its biggest intraday decline in history with a nearly 1,600 point drop. [.N]

Investors fled from equities, spooked by a sharp rise in U.S. bond yields following Friday’s data that showed U.S. wages increasing at the fastest pace since 2009 with lower unemployment, festering concerns over higher inflation and potentially higher interest rates.

Asian shares plunged, with the MSCI’s broadest index of Asia-Pacific shares outside Japan plummeting as much as 4.1 percent in its worst fall since June 2016.

However, Taye Shim, head of research at Mirae Asset Sekuritas, said the market reaction was slightly exaggerated.

“We are looking at situations where prices seem to have picked up little bit fast. However, I do not believe we are in a bubble situation,” he said.

The correction is likely to continue for a while and presents a good opportunity for investors to collect attractive assets, said Shim.

Vietnam, which as of Friday’s close was the only Southeast Asian stock market with double-digit percentage gains this year, slumped as much as 6.3 percent in the session, its steepest intraday percentage decline since October 2001.

Malaysian shares plunged as much as 3.1 percent, in their biggest intraday percentage drop since April 2013.

Philippine shares fell as much as 2.7 percent, led by losses in financials.

Philippine annual inflation accelerated much faster than expected in January, data showed, increasing the chances of an interest rate hike this week.

Index heavyweights BDO Unibank Inc fell as much as 2.9 percent, while Ayala Corp slumped to a two-month low.

Singapore shares retreated as much as 3.6 percent, in their biggest intraday drop in over a year, as financial stocks pulled down the index.

Slideshow (2 Images)

Oversea-Chinese Banking Corp marked its steepest drop in over 2-1/2 years, while DBS Group Holdings Ltd and United Overseas Bank Ltd fell as much as 3.6 percent and 4.2 percent, respectively.

Indonesian shares fell as much 2.3 percent, marking their biggest drop in 14 months.

Thai shares retreated as much as 2.7 percent, posting their biggest intraday percentage drop in 15 months.

Reporting by Nikhil Kurian Nainan in Bengaluru, additional reporting by Karthika Suresh Namboothiri; Editing by Amrutha Gayathri

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